11. Forensic audit Аня

Unit 5 ex.1-8

Forensic auditing is a specialized type of auditing aimed at detecting errors or intentional fraud in financial statements. It helps determine whether mistakes are accidental or deliberate and uncovers any illegal activities within an organization. Forensic auditors analyze revenue sources, cash flows, assets, liabilities, and bank accounts to identify suspicious or fraudulent behavior.

This field requires strong accounting knowledge, numerical ability, and analytical skills. Forensic auditors often work in large accounting firms and may provide expert testimony in court cases. Their investigations cover not only fraud and embezzlement but also disputes related to bankruptcy, business closures, and divorces.

The forensic audit process includes planning, evidence gathering, reviewing, and reporting. Objectives typically involve identifying fraud, determining its duration and parties involved, quantifying financial losses, and recommending prevention measures. Evidence must be collected properly to be used in court. The final report is presented to the client and, if necessary, to the court.

Common types of fraud uncovered by forensic audits include theft (cash, inventory, fraudulent payments), corruption (conflicts of interest, bribery, extortion), and financial statement fraud, which involves false reporting of a company’s financial status.

оч краткий вариант

Forensic Audits: Finding Financial Fraud

Forensic audits uncover mistakes and fraud in financial records. Experts check if errors were accidental or intentional by analyzing money flows, assets, and accounts.

These auditors need accounting skills and often testify in court. They investigate fraud, bankruptcies, and legal disputes. The process involves:

1) Planning

2) Collecting evidence

3) Reviewing documents

4) Reporting findings

They find three main fraud types:

- Theft (cash, inventory)

- Corruption (bribes)

- Fake financial reports

Audits show who committed fraud, for how long, and how much was stolen. Results help prevent future crimes.

12. Forensic audit investigation Аня

Unit 5 ex. 15-16

A forensic auditor requires specialized training in forensic audit techniques and legal aspects of accounting. Unlike regular audits, forensic audits include additional steps focused on investigating fraud.

The process begins with planning the investigation, where the auditor understands the client's concerns and sets objectives such as identifying the fraud, its duration, how it was concealed, the perpetrators, financial losses, gathering court-admissible evidence, and recommending prevention measures.

Next is collecting evidence, which must be sufficient to prove the fraud in court, reveal the fraud scheme, and document losses and affected parties. Forensic auditors use various techniques including substantive tests (like document reviews), analytical procedures (trend comparisons), computer-assisted tools, internal control testing, and suspect interviews. They must ensure evidence remains intact and unaltered.

Then comes reporting, where auditors prepare a detailed report summarizing findings, evidence, how the fraud occurred, and suggestions to improve internal controls. This report helps clients decide on legal action.

Finally, during court proceedings, forensic auditors explain the evidence and fraud clearly in simple language so that non-experts can understand. They play a crucial role in supporting legal cases by simplifying complex financial information.

In summary, forensic auditing is a thorough process requiring expertise in accounting, auditing, and legal knowledge to detect fraud and collect evidence properly.

краткий **Forensic Audits: How They Work**

Forensic auditors are financial detectives trained to find fraud. Their work differs from regular audits by focusing specifically on uncovering illegal activities.

The investigation follows key steps:

1) **Planning** - Defining what fraud to look for and how to find it

2) **Evidence Collection** - Gathering documents, analyzing trends, and interviewing suspects

3) **Reporting** - Creating a clear document explaining the fraud

4) **Court Testimony** - Simplifying complex findings for judges and juries

These experts use special tools to:

- Compare financial records

- Track hidden transactions

- Prove evidence hasn't been tampered with

Their final reports help companies:

- Understand how fraud happened

- Calculate losses

- Strengthen defenses against future crimes

Forensic auditing combines accounting skills with legal knowledge to turn financial clues into courtroom evidence.